June 14, 2008	Saturday	Jamadi-us-Sani 09, 1429

KARACHI, June 13: Islamabad has cut down on Sindh’s share of funds from gas development surcharge and other levies on oil and gas in the current fiscal year as well as next year, official and authoritative sources informed Dawn on Friday.

“We have approached the federal government to explain a cut in proposed Rs42 billion straight transfers of development surcharge and other levies,’’ a senior officer disclosed. The officer said the Sindh government expects some clarification or restoration of original amount in next few days.

Overall, the Sindh government expects a total flow of about Rs150 billion plus from Islamabad during 2008-09. Of this Rs102 billion is expected to come from the federal divisible pool of taxes, Rs40 billion direct transfers on account of share in petroleum development surcharge and other levies on oil and gas.

About Rs8.6 billion has been indicated as subvention grant by the federal government fort next fiscal year.

The year 2008-09 will be the third consecutive year in which resources between the federation and the provinces and between the provinces are being distributed on the basis of President Musharraf’s formula. In this formula, population is the only criterion on the basis of which financial resources are being distributed and sales tax is completely federalised.

Officials in Sindh government are hinting at presenting a provincial budget of Rs260 to Rs270 billion for the year 2008-09 that may incorporate about Rs65 to Rs70 billion development budget.

The expenditure budget will show a rise of 10 per cent over 2007-08 but the development effort will be almost 25 per cent more than Rs50 billion in the current fiscal year.

According to financial analysts the foreign exchange component in Sindh’s development outlay is on rise, which is adding on the burden of foreign debt on the province.

“Debt servicing on account of rising foreign debt is touching alarming levels,’’ an analyst said who pointed out that loans from the World Bank and Asian Development Bank served Sindh by way of retiring costly cash development loans.

In the next budget, the development budget is expected to include a billion dollar worth mega city project, a mega water supply project and mass communication transit project.